But in the last few months, the nation’s new prime minister, Shinzo Abe, has pushed policy makers and other officials to take bold steps to revive one of the world’s largest economies. Their handiwork was evident on Thursday when the Japanese yen hit 100 to the dollar for the first time in four years.

Normally a weakening exchange rate might be taken as a sign of decline. The yen has fallen nearly 14 percent against the dollar this year, and no currency has fallen more except the Venezuelan bolívar.

But in Japan’s case, it is a sign that the policies put in place by Mr. Abe and Haruhiko Kuroda, chairman of the Bank of Japan, are starting to work. A weaker yen makes Japanese exports more competitive around the world.

The most immediate impact of the weaker yen has been the boost in profits of the major exporters. This week, the Toyota Motor Corporation reported net income in the last 12 months jumped threefold, and Sony produced an annual profit for the first time in five years. Both companies forecast further profit increases largely because of the weaker yen.

Perhaps more important, particularly for the citizens of Japan who have suffered from a long period of falling wages and prices, the yen’s move is expected to kindle inflation in the once moribund economy.

Bank of Japan has moved aggressively to reinvigorate the economy and fight deflation. Last month, the central bank announced a decisive break with its earlier policies. Instead of focusing on keeping overnight interest rates close to zero — which seemed to be having little effect in reviving growth — the central bank aimed to double the amount of money in circulation, seeking to produce annual inflation of about 2 percent.

“This is new territory for the Bank of Japan, and the market is responding to that,” said Aroop Chatterjee, foreign exchange strategist at Barclays Capital in New York. “The Bank of Japan announced very strong monetary policy easing at the start of April.”

However, he said the more immediate trigger for the rate to cross Thursday’s threshold was signs of strength in the United States economy.

Amari Akira, Japan’s economic revitalization minister, quickly focused attention away from Japan’s role in weakening its own currency, in a bid to stave off accusations that Japan was manipulating the yen to bolster its exports. Rather, he said the dollar’s strength reflected investors’ hopes for an economic comeback in the United States.

“It’s the dollar that’s in demand because economic recovery in America is gathering steam,” Mr. Amari said at a morning news conference.

The efforts by the Bank of Japan to continue to flood the economy with liquidity is likely to keep downward pressure on the yen in the coming months. The central bank is following an asset purchase program to inflate the economy by aggressively buying longer-term bonds and doubling its government bond holdings in two years.

By mid-afternoon in Tokyo on Friday, the dollar was trading at 101.03 yen.

Galvanized on by the yen’s renewed weakness, the Nikkei 225 index jumped more than 400 points, or 2.9 percent, to close in Tokyo at 14,607.54, led by exporter stocks.

Japanese officials say the policy does not overtly pursue a lower yen rate, which could raise tensions with other exporting nations like the United States. But a weaker yen is a welcome development in some ways.

The depreciation of the yen may be a step in the right direction as the authorities try to stimulate some growth. However, Japan still faces many stiff challenges until it breaks out of its period of deflation. It has an aging and shrinking population and cumbersome regulations that make the economy inefficient.

Article source: http://www.nytimes.com/2013/05/11/business/global/pro-inflation-policies-show-signs-of-helping-japan-economy.html?partner=rss&emc=rss